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C-Stores Under Pressure in Midwest and Maine

But one Maine store bucks trend; Government bailout of GM may ease fears.

December 21, 2008, 07:00 pm

WINTERPORT, Maine and JANESVILLE, Wis. -- A rising tide of business closures -- especially among smaller mom and pop stores -- in Maine, and planned auto plant closings across the Midwest has heightened concerns among both c-store owners and consumers.

More than 270 convenience stores in Maine closed in 2007, according to the Maine Department of Labor’s Center for Workforce Research and Information. In Janesville, Wis., more than 1,200 workers at General Motors will walk out of the assembly plant there for the last time Tuesday as the auto maker struggles to avoid bankruptcy. Residents there fear the plant closing will forever change the neighborhood business community.

However, those concerns may be eased by Friday’s announcement that the Bush administration approved an emergency bailout of the U.S. auto industry, offering $17.4 billion in rescue loans in exchange for deep concessions from the desperately troubled carmakers and their workers.

According to a report by the Bangor Daily News, Maine’s ubiquitous mom-and-pop gas station and corner stores, which dot the landscape at the junctions of most major roads, have been closing at a record rate. Nationwide, Convenience Store News’ research partner TDLinx reported store count in the convenience industry is down 670 stores since the end of 2007.However, Deb’s Variety last week bucked the trend, holding a grand reopening for its store on Route 139 in the western part of Winterport in the Pine Tree State. Just 10 months after owner Joe Tyler sold the store, its new owners went bankrupt and the store went dark, according to the report.

“The day I bought it back, we probably got 75 phone calls from people in a four- or five-hour period. They just didn’t want the store to close,” Tyler told the Bangor Daily News.

Tyler and his wife, Deb, had successfully run Deb’s Variety for 16 years when they decided to sell it in September 2007. The new owner changed the name and operated the store for just 10 months before going bankrupt and losing the property to foreclosure.

The Tylers, who still owned a stake in the property, bought it back at auction on Nov. 6, for $161,000, and have been working long days since to get ready to reopen, according to the report.Tyler said he was optimistic about the store’s new start, but admitted business is tough these days for owners of small convenience stores.

With high costs, low gas margins and climbing credit card fees, some retailers can barely afford to run the electricity on their pumps. Like many other c-stores around the country, Tyler is putting a lot of attention on his deli and kitchen in order to entice drivers into the store for a sandwich and a cup of coffee.

Real estate agents interviewed by the Bangor Daily News noted selling a high volume of food is how people survive in the convenience store business. “Your food is obviously your biggest profit,” said David Buchstaber, owner of Village Point Realty. “Your mom-and-pops, it’s tough for them. It’s a hard business.”

Out in Janesville, Wis., Ed Francois, owner of the Jackson Street Citgo expressed his concerns about the loss of customers coming in and out of the GM plant near his store.

Francois told the Janesville Gazette that about 40 percent of his business comes from GM workers, and he sees no way to make up for the loss.

"We're always depending on that traffic, on that street, from neighbors and businesses," he told the paper. "But without the GM plant operating, that's going to be a huge reduction in traffic at that intersection.”

To keep the fuel and convenience store open, Francois said he'll have to cut costs, including payroll. Francois said his business has been declining as the number of workers at the plant has been reduced.

Like Tyler in Maine, Francois is also hopeful in light of all the doom and gloom.

"We just have to wait and see what happens and develops with GM in the future or with its successor to the property,” he told the Gazette. “I think Janesville/Rock County has a tremendous workforce. I just hope someone sees it as a jewel and comes in and takes over."

More plant closings across the Midwest might be averted by Friday’s approval of a government bailout for the auto industry. President Bush said, "Allowing the auto companies to collapse is not a responsible course of action." Bankruptcy, he said, would deal "an unacceptably painful blow to hardworking Americans" across the economy.

Approximately $13.4 billion of the money will be available this month and next -- $9.4 billion for General Motors Corp. and $4 billion for Chrysler LLC. Both companies have said they were running out of funds to pay their bills without federal help. Ford Motor Co. has said it does not need immediate help.